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SUMMARY OF UNION BUDGET
2009-10
Date: 06/07/2009
GENERAL BUDGET 2009-10
The Budget seeks to address the three challenges facing the economy - to lead
the economy back to the high GDP growth rate of 9 per cent per annum at the
earliest, to deepen and broaden the agenda for inclusive development, and to
energize government and improve delivery mechanism.
INFRASTRUCTURE
Infrastructure development will be given a big boost. Bottlenecks for speedy
implementation of infrastructure projects will be removed to ensure that
sufficient funds are made available for this sector. Infrastructure Finance
Company Limited (IIFCL) will evolve a ‘Takeout financing’ scheme in
consultation with banks to facilitate incremental lending to the
infrastructure sector.
Allocation for the National Highways Development Programme is being increased
by 23 per cent, Jawaharlal Nehru National Urban Renewal Mission by 87 per cent
and Accelerated Power Development and Reform Programme by 160 per cent.
A new scheme, Rajiv Awas Yojana will be introduced with the aim to make the
country slum free in the next five years.
The Government proposes to develop a blueprint for long distance gas highway
leading to a National Gas Grid. This would facilitate transportation of gas
across the length and breadth of the country.
AGRICULTURE
The target for agriculture credit flow has been increased from Rs. 2,87,000
crore last year to Rs. 3,25,000 crore for 2009-10. The interest subvention
available for short term crop loans up to Rs. 3 lakh per farmer will continue
and an additional subvention of 1 per cent will be paid from this year to
those farmers who repay such loans on schedule. Thus, the interest rate for
these farmers will come down to 6 per cent per year.
Under the farm loan waiver scheme of Rs.71,000 crore implemented in the last
budget, the time for paying 75% of overdues has been extended to 31st
December, 2009. A Taskforce is being set up to suggest the course of action
regarding farmers of some regions of Maharashtra who have taken loans from
money lenders and the loan waiver scheme did not cover them.
The allocation for Rashtriya Krishi Vikas Yojna (RKVY) is being stepped up by
30 per cent and that for Accelerated Irrigation Benefit Programme by 75% over
the allocation last year.
To ensure balanced application of fertilizers, the Government intends to move
towards a nutrient based subsidy regime instead of the current product pricing
regime. It will lead to availability of innovative fertilizer products in the
market at reasonable prices and attract fresh investments in this sector. In
due course, it is also intended to move to a system of direct transfer of
subsidy to the farmers.
The Finance Minister announced that the draft Food Security Bill will soon be
put on the net for public debate and consultations. The proposed National Food
Security Act will ensure that every family living below the poverty line in
rural or urban areas will be entitled by law to 25 kilos of rice or wheat per
month at Rs. 3 a kilo.
EXPORTS
The export sector will be provided all possible assistance to help it overcome
the impact of the global economic crisis. The Budget provides a special fund
of Rs. 4,000 crore to support the Micro, Small and Medium Enterprises. This
fund will incentivize banks and State Finance Corporations to lend to micro
and small enterprises by refinancing 50 per cent of incremental lending to
them. The allocation for the Market Development Assistance Scheme, which
provides support to exporters in developing new markets has been enhanced by
148 per cent. The 2 per cent interest subvention on pre-shipment credit to
employment-oriented export sector has been extended till March 31, 2010.
INCLUSIVE DEVELOPMENT
Stating that ‘aam admi’ is now the focus of all our programmes and schemes,
the Finance Minister has announced a slew of provisions for inclusive
development and empowerment of the weaker sections.
The provision for the Bharat Nirman Schemes has been raised by 45 per cent.
National Rural Employment Guarantee Scheme (NREGS) gets 144 per cent more,
Pradhan Mantri Gram Sadak Yojana (PMGSY) 59 per cent more, Rajiv Gandhi
Grameen Viduytikaran Yojana (RGGVY) 27 per cent more and Indira Awas Yojana (IAY)
63 per cent more than last year. A sum of Rs. 2,000 crore has been allocated
for Rural Housing Fund. A new scheme, Pradhan Mantri Adarsh Gram Yojana (PMAGY)
will be launched this year on a pilot basis for integrated development of 1000
villages with above 50 per cent Scheduled Caste population.
Stress will be laid on the formation of women Self Help Groups (SHGs). Apart
from providing capital subsidy at an enhanced rate, it is also proposed to
provide interest subsidy to poor households for loans upto Rs. 1 lakh from
banks.
A National Mission for Female Literacy will be launched with the aim to reduce
the current level of female literacy by half in three years. It will focus on
minorities, SC, ST and other marginalized groups. Reach of Self Help Groups
will be widened to enroll at least 50 per cent of all rural women as members
of SHGs over the next five years.
The Swarna Jayanti Gram Swarozgar Yojana (SGSY) is to be restructured as
National Rural Livelihood Mission to make it universal in application, focused
in approach and time bound, for poverty eradication by 2014-15.
The Budget commits that all Integrated Child Development Services will be
extended to every child under the age of six by March, 2012.
The allocation for the Ministry of Minority Affairs has been increased by 74
per cent. The Budget has made allocations for the new schemes of National
Fellowship for Students from minority community.
A new project is being launched for modernization of the Employment Exchanges
to enable job seekers to register on-line from anywhere and approach any
employment exchange.
The Government proposes to bring all BPL families under the Rashtriya Swasthya
Bima Yojana (RSBY). The allocation for the scheme is being increased by 40 per
cent.
IMPROVING DELIVERY OF SERVICES
A number of initiatives have been proposed for improving delivery of public
services.
The Finance Minister has expressed the hope that the first set of unique
identify numbers will be rolled out in 12 to 18 months. A provision of Rs. 120
crore has been kept for this purpose.
The Budget provides additional funds for modernization of police forces and
for strengthening border management. A massive programme of housing will be
launched to create one lakh dwelling units for Central Para-Military Forces
personnel.
The Government has accepted the recommendations of the Committee for one Rank
one Pension for ex-servicemen. It has been decided to substantially improve
the pension of pre-1.1.2006 defence pensioners below officer rank and bring
pre-10.10.1997 pensioners on par with post-10.10.1997 pensioners. This will
benefit more than 12 lakhs jawans and JCOs and would cost over Rs. 2,100 crore
per year.
A sum of Rs. 1,000 crore has been kept in the Budget for rebuilding the
infrastructure damaged by Cyclone Aila. The Budget also provides Rs. 500 crore
for the rehabilitation of the internally displaced persons and reconstruction
of the northern and eastern areas of Sri Lanka.
Among other major initiatives, the Government will set up an expert group to
advise on a viable and sustainable system of pricing petroleum products. Rs.
100 crore has been earmarked to ensure provision of at least one centre /
Point of Sales for banking services in each of the unbanked block in the
country. Allocation for Commonwealth Games has been raised. Necessary
provisions have been made for new IITs and NITs, opening one Central
University in each uncovered State, and establishing campuses of Aligarh
Muslim University at Murshidabad in West Bengal and Malappuram in Kerala.
TAX PROPOSALS
Presenting the Budget, the Finance Minister, Shri Pranab Mukherjee said that
the tax reforms initiatives have produced impressive results. Tax-GDP ratio
has increased to 11.5 per cent in 2008-09 from 9.2 per cent in 2003-04. The
share of Direct Taxes in Centre’s Tax Revenues has increased to 56 per cent in
2008-09 from 41 per cent in 2003-04. There is no change in the Corporate Tax
rates while there has been a modest hike in the exemption limit on personal
Income Tax. The exemption limit for Senior Citizens has been increased from Rs.
2.25 lakh to Rs. 2.40 lakh. For Women tax payers the exemption limit has been
increased by Rs.10,000 to from Rs.1.80 lakh to Rs. 1.90 lakh and from Rs. 1.50
lakh to Rs.1.60 lakh for all other categories of individual taxpayers. The
surcharge of 10 per cent on personal Income Tax has been done away with.
The Finance Minister also proposes to abolish the Fringe Benefit Tax. He said
that this tax has been perceived as imposing considerable compliance burden.
The minimum Alternate Tax rate to be increased from 10 per cent to 15 percent.
This, he said, is for bringing greater equity. However, he also proposed to
extend the period allowed to carry forward the tax credit under MAT from 7
years to 10 years.
To provide necessary fiscal support to the New Pension Scheme for
establishment of the much needed social security system. The Finance Minister
also proposed to exempt the income of the NPS Trust from Income Tax and any
dividend paid to this Trust from Dividend Distribution Tax. Similarly all
purchase and sell of equity shares and derivatives will also exempt from the
Security Transaction Tax. The Commodities Transaction Tax has been abolished.
The scope of Presumptive Taxation has been expanded to all small businesses
with a turn-over of Rs. 40 lakh. All such tax payers will have the option to
declare their income from business @ 8 per cent of their turn-over and
simultaneously enjoy exemption from the compliance burden of maintaining books
of accounts.
Tax holiday under Section 80–IB(9) will be extended in respect of profits
derived from the commercial production of Mineral Oil and Natural gas from oil
and gas blocks which are awarded under the new Exploration Licensing Policy-
VIII round of bidding.
On the Indirect Tax front, Excise Duty has been hiked on several items to 8
per cent barring food items, drugs, pharmaceuticals, paper, paper board,
pressure cookers, cheaper electric bulbs and low price foot wear. The basic
Customs Duty on bio-diesel has been brought down from 7.5 to 2.5 per cent.
Excise duty on petrol driven trucks has been brought down from 20 per cent to
8 per cent. Excise duty on man-made fibre and yarn has been increased from 4
to 8 per cent. It has also been increased on PTA, DMT and polyester chips from
4 to 8 per cent. Set-top box for television will attract Customs Duty of 5 per
cent while Customs Duty on LCD panels will be reduced from 10 to 5 per cent.
Service tax will be imposed on service provided in relation to transport of
goods by rail, coastal cargo and goods through inland water including National
Waterways. Cosmetic and plastic surgery and advise, consultancy and technical
assistance in the field of law will also attract service tax. This however,
will not be applicable if the service provider or the service receiver is an
individual.
The Finance Minister said the Tax proposals on direct taxes will be revenue
neutral while on indirect taxes the estimated net gain will be Rs. 2,000 crore
for a full year.
BUDGET ESTIMATES
The Budget estimates 2009-10 provide for a total expenditure of Rs. 10,20,838
crore. Out of it, Rs. 6,95,689 crore is non-Plan expenditure and Rs. 3,25,149
crore is Plan expenditure. Thus, the total expenditure this year is 36 per
cent over that of 2008-09. The increase in Non-Plan expenditure comes to 37
per cent whereas the increase in Plan expenditure is 34 per cent.
The Government has taken a conscious decision to enhance the gross budgetary
support for the Annual Plan 2009-10 by Rs. 40,000 crore over the Interim
Budget. Bulk of this enhanced GBS is directed towards public investment in
infrastructure with special emphasis on rural infrastructure, raising growth
potential and leading to income generation. Besides, the State Governments
will be permitted to raise additional open market loans of about Rs. 21,000
crore in the current year. “This fiscal expansion will go a long way in
reversing the impact of economic slowdown and accelerate our growth revival in
the medium term,” the Finance Minister said.
The gross tax receipts are budgeted at Rs. 6,41,079 crore, lower than last
year while the non tax revenue receipts have been estimated at Rs. 1,40,279
crore - higher as compared to last year. The revenue deficit as a percentage
of GDP is projected at 4.8% compared to 1% in BE 2008-09 and 4.6% as per
provisional accounts of 2008-09. The fiscal deficit as a percentage of GDP is
projected at 6.8% compared to 2.5% in BE 2008-09 and 6.2% as per provisional
accounts 2008-09. The Minister explained: “This level of deficit is a matter
of concern and Government will address this issue in right earnest to come
back to the path of fiscal consolidation at the earliest.”
HIGHLIGHTS OF THE BUDGET
Date: 06/07/2009
GENERAL BUDGET 2009-10
· THE FINANCE MINISTER SHRI PRANAB MUKHERJEE, UNVEILS MASSIVE HIKE IN
EXPENDITURE TO PUT THE ECONOMY ON GROWTH PATH.
· TOTAL EXPENDITURE INCREASED BY 36 PER CENT; PLAN EXPENDITURE TO GO UP 34 PER
CENT TO RS. 3,25,149 CRORE.
· NON-PLAN EXPENDITURE TO GO UP BY 37 PER CENT.
· TARGET FOR AGRICULTURAL CREDIT FLOW SET AT RS. 3,25,000 CRORE. ALLOCATION
UNDER RASHTRIYA KRISHI VIKAS YOJANA INCREASED BY 30 PER CENT AND UNDER
ACCELERATED IRRIGATION BENEFIT PROGRAMME INCREASED BY 75 PER CENT.
· ALLOCATION UNDER NREGS HIKED BY 144 PERCENT TO RS. 39,100 CRORE.
· ALLOCATION UNDER BHARAT NIRMAN INCREASED BY 45 PERCENT; PRADHAN MANTRI GRAM
SADAK YOJANA, RAJIV GANDHI GRAMEEN VIDYUTIKARAN YOJANA AND INDIRA AWAAS YOJANA
GET SUBSTANTIAL HIKE.
· NEW SCHEME OF PRADHAN MANTRI ADARSH GRAM YOJANA TO BE LAUNCHED ON PILOT
BASIS.
· ALL BPL FAMILIES TO BE COVERED UNDER RASHTRIYA SWASTHYA BIMA YOJANA .
· UNIQUE IDENTIFICATION AUTHORITY OF INDIA GETS RS. 120 CRORE.
· ONE-RANK ONE-PENSION COMMITTEE REPORT ACCEPTED. PRE-1997 AND PRE-2006 BELOW
OFFICER RANK DEFENCE PENSIONERS TO BENEFIT.
· OUTLAY FOR COMMONWEALTH GAMES INCREASED TO RS. 3472 CRORE.
· NO CHANGE IN CORPORATE TAX RATES.
· INCOME TAX EXEMPTION LIMIT INCREASED BY RS. 10,000 FROM RS. 1.5 LAKH TO RS.
1.6 LAKH, FROM RS.1.8 LAKH TO RS.1.9 LAKH FOR WOMEN TAX PAYERS AND RS.2.25
LAKH TO RS. 2.4 LAKH FOR SENIOR CITIZENS.
· 10 PER CENT SURCHARGE ON INCOME TAX GOES.
· FRINGE BENEFIT TAX TO BE ABOLISHED.
· MINIMUM ALTERNATE TAX INCREASED FROM 10 TO 15 PER CENT.
· COMMODITY TRANSACTION TAX TO BE ABOLISHED.
· TELEVISION SET-TOP BOX TO ATTRACT 5 PER CENT CUSTOMS DUTY.
· CUSTOMS DUTY ON BIO-DIESEL REDUCED FROM 7.5 TO 2.5 PERCENT ON LCD PANELS
FROM 10 PER CENT TO 5 PER CENT. AND ON 10 SPECIFIED LIFE SAVING DRUGS/VACCINE
FROM 10 PER CENT TO 5 PERCENT.
· CUSTOMS DUTY ON GOLD INCREASED FROM RS. 250 PER 10 GRAMS TO RS. 500.
· EXCISE RATE HIKED FROM 4 TO 8 PER CENT FOR A NUMBER OF PRODUCTS BARRING
SPECIFIED FOOD ITEMS, DRUGS AND PHARMACEUTICALS, MEDICAL EQUIPMENT, PAPER AND
PAPER BOARDS, PRESSURE COOKERS AND CHEAP FOOTWEAR.
· EXCISE DUTY ON NAPTHA, SLASHED TO 14 PER CENT WHILE HIGH SPEED DIESEL
BLENDED WITH 20 PER CENT BIO-DIESEL FULLY EXEMPTED FROM EXCISE DUTY.
· EXCISE DUTY ON MAN-MADE FIBRE, POLYESTER CHIPS, PTA AND DMT TO BE INCREASED
FROM 4 PER CENT TO 8 PER CENT.
· SERVICE TAX TO BE IMPOSED ON COSMETIC AND PLASTIC SURGERY, TRANSPORT OF
GOODS BY RAIL AND COASTAL AND INLAND WATERWAY CARGO.
· REVENUE DEFICIT PROJECTED AT 4.8 PER CENT OF GDP.
· FISCAL DEFICIT PEGGED AT 6.8 PER CENT.
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